GBP/CHF traded higher yesterday after hitting support near the 1.1800 territory, which has been preventing the bears from diving lower since Thursday. However, given that the rate remains below the key resistance zone of 1.1980, which acted as a floor in the recent past, between May 24 and Jun. 15, we see decent chances for the bears to retake charge and push the action back down.
The current rebound could continue for a while, but as we already noted, the bears could take charge from near or below the 1.1980 territory and perhaps push the action back down for another test near the 1.1800 zone. If they manage to break that hurdle this time, a forthcoming lower low would be confirmed, and we may see declines towards the 1.1680 territory, marked by the low of Dec. 11, 2020. If that barrier doesn’t hold either, a further slide could take the rate to the low of Sept. 11, 2020, at around 1.1595.
Shifting attention to our short-term oscillators, we see that the RSI exited its below-30 zone and points up, while the MACD, although negative, lies above its trigger line, pointing up as well. Both indicators detect slowing downside speed and support the idea of some further recovery before the next leg south.
To abandon the bearish case, we would like to see a clear break above 1.2130, the high of Jun. 16. This will confirm a clear forthcoming higher high and may initially pave the way towards the peak of Jun. 9, at around 1.2290, the break of which could invite more bulls into the game, who could help the pair climb towards the 1.2445 zone, marked by the highs of Apr. 21 and May 17, respectively.
